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Minnesota State Legislature - What"s New

The Chronicle (February 2009): An internal newsletter for the Office of the Chancellor

Wednesday, March 4, 2009

Yesterday at the CapitolState leaders released the February economic forecast for the fiscal year 2010-11 biennium yesterday. With help from the federal stimulus package, the budget shortfall appears a bit better than expected - $4.6 billion as opposed to $6.4 billion. While the federal stimulus helps, it is not a permanent budget solution because it is one-time money and will only help reduce budgetary pressures through fiscal year 2011.

"The federal stimulus has helped cushion the blow of a deteriorating economy," Minnesota Management and Budget Commissioner Tom Hanson said. "Nonetheless, this is very sobering economic news."

State economist Tom Stinson warned that with revenue collections down and expenditures up, Minnesota will have a long-term deficit. "This is probably going to be the longest and deepest recession since WWII," he said. "Economic activity is not going to be just stagnant, but declining."

The state is expected to lose 120,000 jobs. However, Governor Tim Pawlenty shed some light on the fact that the federal stimulus package will save nearly 50,000 jobs. He also said the state is facing a challenging time and the belt will have to be tightened. Pawlenty highlighted the Inter Faculty Organization settlement that negotiated a wage freeze saying it was a step in the right direction, it will help state agencies plan. "This won’t eliminate the problem, but it will minimize lay-offs," Pawlenty said.

The governor also made note that there is a bonding bill forecasted within his budget, at a price of nearly $120 million. Pawlenty warned that creating a capital bill should be approached with caution, "We have to be very mindful of managing the debt load of this state."

Lawmakers understand the challenge ahead but had positive comments. "We are committed to solving our entire budget problem and positioning Minnesota for recovery and a brighter future," said Speaker of the House Margaret Anderson Kelliher, DFL-Minneapolis.

House Minority Leader Marty Seifert, R- Marshall, pointed out that his caucus will be working with Democrats on compromises. While Senate Minority Leader David Senjem, R-Rochester, said, "We need to solve this problem for the people that elected us."

At the Capitol:Legislative schedules are available for the House and Senate.